RGC Resources(US:RGCO)2019-02-08 15:50Revenue and Operating Performance - For the three months ended December 31, 2018, total operating revenues increased by 13% to $21,216,747 compared to $18,756,051 in the same period last year[104]. - Gas utility revenues rose by 14% to $21,036,581, while the cost of gas increased by 25% to $11,906,459, resulting in a gas utility margin of $9,130,122, a 2% increase year-over-year[105]. - SAVE Plan revenues increased by 12% to approximately $1,208,000 for the three-month period ended December 31, 2018, compared to $1,076,000 for the same period last year[102]. - Total delivered volumes of regulated natural gas increased by 5%, with residential and commercial volumes rising by 7% to 2,366,074 DTH[104]. - The average commodity price of natural gas delivered during the current quarter was approximately 25% higher than the same period last year, primarily due to weather and supply constraints[104]. - Gas utility margin increased to $9,130,122 for the three months ended December 31, 2018, up by $171,534 or 1.9% from $8,958,588 in 2017[106]. Expenses and Financial Impact - Operation and maintenance expenses rose by $294,255, or 9%, primarily due to increased compensation costs and maintenance on LNG facilities[106]. - General taxes increased by $41,567, or 9%, driven by higher property and payroll taxes[107]. - Interest expense increased by $204,137, or 33%, due to a 24% rise in total average debt outstanding and rising interest rates[110]. - Income tax expense decreased by $433,483, reflecting a reduction in the federal income tax rate from 24.3% to 21%[111]. Investments and Projects - The Mountain Valley Pipeline, in which the Company has a 1% investment, is currently under construction and is expected to enhance the Company's operational capabilities[93]. - Equity in earnings of unconsolidated affiliate more than doubled, increasing by $414,238, attributed to significant investment in the Mountain Valley Pipeline project[108]. - The estimated project cost for the Mountain Valley Pipeline increased from $3.5 billion to $4.6 billion, raising Midstream's cash investment from $35 million to $46 million[122]. - The Company invested more than $10.1 million in the MVP for the three months ended December 31, 2018, compared to $1.2 million for the same period last year[137]. Rate Cases and Refunds - Roanoke Gas filed a general rate case application requesting an annual increase in customer non-gas base rates of $10.5 million, effective January 1, 2019[125]. - The Company recorded an estimated refund for excess revenues totaling almost $1.9 million as of December 31, 2018, due to over-recovery from customers[127]. - The Company accrued a $157,000 reduction in revenue for weather that was 3% colder than normal, compared to an accrual of $37,000 in additional revenue for weather that was 1% warmer than normal in the previous year[99]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $236,602 for the three months ended December 31, 2018, compared to an increase of $264,638 for the same period last year[134]. - Net cash used in operating activities was $(2,300,174) for the three months ended December 31, 2018, compared to $(1,958,693) for the same period last year[134]. - Total capital expenditures for the first three months were $5.7 million, representing a nearly $1.4 million increase over the same period last year[136]. - Cash flows provided by financing activities were $17.9 million for the current period, compared to $7.8 million for the same period last year[138]. - The Company had $15,801,798 balance under its variable rate line-of-credit as of December 31, 2018[141]. - A hypothetical 100 basis point increase in market interest rates would have resulted in an increase of approximately $93,000 in interest expense for the quarter[141]. - The long-term capitalization ratio as of December 31, 2018, was 52.4% equity and 47.6% debt[139]. Regulatory Environment - The Company’s utility operations are regulated by the Virginia State Corporation Commission, which oversees rates and terms for natural gas service[94]. - The 2019 SAVE Plan Rider is expected to provide approximately $362,000 in revenue, focusing on the replacement of pre-1973 plastic pipe[130]. - The utilization fee from the asset manager is shared with customers, with the first $700,000 going to customers and subsequent amounts split 25% to the Company and 75% to customers[131].